Pages

Wednesday, September 7, 2011

Not a good idea to revive gov't broadband

Poor P-Noy. Some people may just be trying to use his good name and clean reputation to revive that infamous government broadband network (GBN) project. That project got Ate Glue into trouble not only because it was overpriced. Worse, it was also not urgently needed because the private sector can provide the service better. It is this last part that is ignored by the proposal of some Aquino administration officials to revive this unworthy project.

The project’s revival was proposed by Science Secretary Mario Montejo. He was able to get P-Noy to sign last June, Executive Order 47, downgrading the Commission on Information and Communications Technology or CICT into an office under the control of Department of Science and Technology (DOST). Also transferred to DOST were CICT’s attached agencies, namely, the National Computer Center and the Telecommunications Office or TELOF.

As pointed out by a report from ABS-CBN’s Lynda Jumilla, this movement of agencies jibes with Montejo’s proposal to designate DOST and the former CICT as point agencies for the implementation of the GBN project. I read the 35-page proposal submitted to Malacañang and I got the feeling it merely regurgitates the justifications made by Ate Glue’s DOTC we heard during the Senate hearings.

DOST’s Montejo claims a government broadband network will supposedly integrate and address data processing, storage, computing and high-speed connectivity needs of government agencies. DOST also estimate the GBN project will cost P800 million, which is claimed to be less than half of the P2 billion that government spends for Internet connectivity.

But experts are not impressed. Dr. Raul Fabella, one of two UP economists who studied the anomalous NBN-ZTE deal, believes DOST’s estimate is on the low side, designed to misrepresent actual project cost and does not include expenses for labor, maintenance and system upgrade. Input all those expenses and the claimed savings will likely not be compelling.

Fabella also doubts that a broadband network operated by government would be competitive and have the cutting-edge technology provided by private telcos. Fabella told ABS-CBN News: “Ang kinatatakutan ko dito, we spend P800 million for set-up cost and then you eventually simply turn your back because it’s not workable anymore.”

It isn’t as if something like that didn’t happen before. As Fabella pointed out, this happened to the government’s “Telepono sa Barangay” project that sought to provide landline phone services in every barangay across the country. That project was abandoned, after so much money had been spent, as cellular phone service became widely available and more reliable too.

Another industry consultant who is familiar with past government telecom projects agreed with the view of Fabella. He expects the project to entail a higher set up cost than DOST is claiming and doubts if the project will save money for government in the long run. “I may even grant that it would save government recurring cost – but only at the beginning. Then after a year or two, the whole thing breaks down because maintenance is the bane of government agencies. No one looks at sustainability.”

Because telecoms technology is constantly changing, government will be left with obsolete equipment rendering less than adequate service way before they can fully depreciate the facilities in their books. Private sector telecoms companies are better situated to deal with this fast rate of obsolescence. On the other hand, government agencies can demand and can get top state of the art service from private telcos under threat of losing the account. Fabella thinks “government agencies should be able to choose their providers. Paano na lang kung pangit ang service ng gobyerno? Eh di patay na. No choice ang government agencies. Monopoly eh.”

ANC’s Coco Alcuaz interviewed Ray Anthony Roxas-Chua who said reviving the project was not just a mistake but “an extreme response”. He told Coco, anchor of ANC’s Business Nightly, that the government should stick to its competency and, rather than build its own broadband network, provide incentives for the private sector to take on that need.

Roxas-Chua said government should provide policies and incentives to encourage private players to put more broadband capacity in the country specially in under served rural areas. Chua said that if the proper incentives are given, the private sector, not the government, will invest the capital needed to provide a more robust telecoms infrastructure. But government must work on the industry’s competitive dynamics so that prices of broadband services will go down for both government and ordinary consumers. I guess this means government must never allow a telecoms monopoly or de facto monopoly to exist.

That was exactly the point of Dr. Fabella, who incidentally was conferred by P-Noy the distinct honor of being called a National Scientist. At the very least, P-Noy should hear out the man he thought was of superior accomplishments and intelligence to merit being a National Scientist. Rather than use scarce government resources building its own broadband network, Dr. Fabella thinks government agencies are better off getting Internet services from the private sector. Between the National Scientist and the Secretary of Science, I am sure the scientific community would have more respect for Dr. Fabella’s wisdom.

From the perspective of political strategy or even just simple PR, it is plainly stupid to revive the project that practically brought down the Ate Glue regime in the minds of our people. If P-Noy revives GBN, not only will her defenders be able to say that the broadband project was valid and was only politicized by the opposition including then Senator Aquino. P-Noy has better use of his time than to defend this less than worthy proposal.

Reviving a less than urgent project whose stench of corruption was simply unbearable is like committing political hara kiri. It will confirm what some people already suspect, that while they think P-Noy is immaculately honest, his subalterns are rather eager to capitalize on his clean image to make hay before the political tide turns.

If P-Noy is unable to smell a rat in this DOST proposal and supports it, then heaven help him and the country when the bigger infrastructure projects come up for decision.

Competitiveness

In a speech in a business meeting in Xiamen, P-Noy pointed out that Filipino foreign direct investments in China total $2.8 billion, while Chinese investments in the Philippines total $500 million. Something must be seriously wrong if we have become a net exporter of capital when we need such capital badly to move our economy and country along.

Over the weekend, one of the US Embassy documents leaked by Wikileaks provides an analysis of what’s going on. The document dated Jan. 25, 2010 noted that weak public institutions had repelled foreign businesses.

The report, in particular, states that “many foreign investors describe the inefficiency and uncertainty of the judicial system as a significant disincentive for investment”. The legal system’s shortcomings were said to be the result of “...judges rarely [having] a background in, or thorough understanding of, market economics or business, and that their decisions stray from the interpretation of law into policymaking”.

Corruption, meanwhile, was described as a “pervasive and longstanding problem” because “the enforcement of anti-corruption law has been weak and inconsistent”. The report also noted that the Philippines “is not a signatory of the Organization for Economic Cooperation and Development Convention on Combating Bribery.”

Inefficiencies in agencies concerned with business registration, customs procedures, and immigration have also been “a source of frustration” for many US investors.

That’s why our taipans are investing in China a lot more money than Chinese businesses are investing here. P-Noy wants to even up the flow of investment money, or so he says. He must read that US Embassy memo leaked by Wikileaks and order Sec Greg Domingo to enlist Sec Jesse Robredo’s help because a big bulk of the anti-business behavior and procedures of government is at the LGU level.

Novenas to saints

Rosan C and Romy B sent variations of this text joke now going around.

Kung ayaw mong umulan kasi may party ka, magdasal ka kay Sta Clara.

Kung feeling hopeless ka, mag novena ka kay St. Jude.

Kung may subpoena ka galing sa Senado, tumakbo ka patungong St. Luke.

Boo Chanco’s e-mail address is bchanco@gmail.com. He is also on Twitter @boochanco

No comments:

Post a Comment

About Me

FEF is a public advocacy organization dedicated to advancing the cause of economic and political liberty, good governance, secure and well-defined property rights, and market oriented reforms. It counts among its members former and present Cabinet secretaries and undersecretaries, leading figures in the academe, respected media personalities and opinion makers, and prominent members in the business and finance community.